Chinese Spending More On Luxury Goods For “Little Emperors”

Kids’ collections by major luxury brands are far from new in China, but according to a new survey, a rising percentage of wealthier Chinese are spending more on swathing their “little emperors” in high-end items. Though the definition of “luxury goods” in the study is fairly broad, encompassing everything from toys to clothing, a trend has become clear in recent years as offshoots of “grown-up” luxury brands like Gucci Kids, Burberry Children, Baby Dior and Armani Junior have expanded in China’s major cities.

This, according to the China Research Center for Children’s Industry, is a natural offshoot of the growth seen over the past several years in China’s overall luxury market, as Chinese parents are known “to transfer their preferences in luxury goods to their children.”

According to the new Albatross Global Solutions survey of 900 respondents, 60 percent claim to have spent more than 3,000 yuan (US$474) per month on luxury goods for their offspring in 2011. This is a significant rise over the 40 percent who claimed to have spent the same on previous surveys. As another study by US-based Frost & Sullivan recently found that annual urban Chinese household spending on children’s products could reach $1,256 by the end of 2013.

As Yang Qingshan, guest researcher on luxury goods and services at the University of International Business and Economics in Beijing, told China Daily this week, we should expect more luxury brands to extend into children’s products, as profit margins are higher (as less material is used but prices remain high) and costs are lower. Added Yang, “It’s a huge market.”

Baby Dior is highly popular among China's wealthier new parents

Still, children’s products account for only a small percentage of total sales for top luxury brands in China, with Burberry’s financial results showing that these sales only accounted for four percent of brand revenue from March 2011-March 2012. But with China’s luxury market finally showing signs of slowing down after a multi-year tear, brands need to diversify their offerings to keep consumers interested.

According to Yang, this means they’ll have little choice but to extend (or further expand) into this segment: “Kids’ products will be [the choice for big brands], and I expect to see more specialty stores for kids’ luxury goods in China.”

Interestingly, this trend shouldn’t only buoy the likes of Gucci or Burberry but opens plenty of opportunities for smaller and home-grown brands. Last year, Hangzhou’s JNBY debuted its “jnby by JNBY” kids’ collection, shrinking down many of its adult designs for China’s smallest (and arguably most spoiled) generation.